It’s not by accident that Julie S. Hurst returned to the trenches to sell long term care insurance as an independent agent after eight years coaching and training advisors on the intricacies of the product. As a coach and trainer, Hurst says she sensed an increasing reluctance among advisors and insurance agents to get involved in LTCI because of the growing complexity of the market and the product itself. But in that reluctance, Hurst, who recently founded her own LTCI-focused company, Wealth Preservation Strategies LLC in Indianapolis, saw opportunity. If more advisors and agents were indeed eschewing LTCI altogether, wouldn’t that leave the door wide open for agents who know the intricacies of the product and the market to flourish?
When it comes to a grasp of LTCI, Hurst says, “consumers often are ahead of their advisors these days.” However, advisors and agents who make the effort to stay at least one step ahead of increasingly savvy clients by keeping close tabs on the dynamic LTCI market are strategically positioned to land clients and sell products some advisors and agents won’t even touch.
So why are some financial professionals foregoing LTCI and the potentially significant income it can generate for a practice?
“In my experience, investment advisors and insurance agents just have an awful time getting comfortable with long term care [insurance],” Hurst explains. “They see so many rate changes, product changes, new product features and companies withdrawing from the market. There is so much turmoil, they say to themselves, ?I’m going to stay away from [LTCI].’ It’s not their bread and butter. They don’t want to be put in a situation with a client where it becomes obvious they don’t really know what they are talking about, because that will reflect poorly on their true areas of expertise.”
Thus come opportunities for people like Hurst who are willing to educate themselves about LTCI and stay abreast of developments in the fast-changing market. But in order for advisors and agents to pounce on those opportunities and build a strong LTCI client base, they first must build and maintain a strong LTCI knowledge base. That entails:
? Developing an approach for addressing and speaking knowledgeably about LTCI with clients, with the goal of uncovering a need where one exists
? Knowing the nuances of product designs and features and having the ability to explain those nuances in terms understandable to the layperson
? Having the ability to match clients with the right kind of policy and features
? Finding out about new products and features before or as soon as they become available
? Knowing market conditions, both locally and nationally, including the cost for various forms of care in the local area
? Understanding the universe of LTCI carriers and how to separate the quality ones from the also-rans
Bottom line: Becoming an LTCI expert – or even just a serviceably knowledgeable agent or advisor – can be a daunting, time-consuming undertaking.
“This is a very complex product and it’s changing all the time,” says veteran LTCI advisor Berry R. Brown. “The devil is certainly in the details with this product.”
But Brown is proof that persistence and hard work in the LTC arena can pay off. Long Term Care Advisors, the independent LTCI agency Brown founded several years ago in Wildwood, Mo., outside St. Louis, is flourishing, he says.
Who do you know?
For newcomers seeking to add LTCI to the product mix, the first logical question is, “Where do I begin?”
Brown and Hurst didn’t need to start at square one in launching their own businesses, having gained valuable seasoning in the LTCI market prior to going independent. But everyone has to start somewhere. And one of the most crucial prerequisites to talking about, recommending and selling LTCI is to learn about the players, the products and the market in which they compete. That requires research and alignment with a good information source – namely a brokerage specializing in LTCI, according to Kevin J. Johnson, CLTC, LTCP, president and co-founder of New York Long Term Care Brokers in Clifton Park, N.Y.
“For the best training and support,” he says, “it’s important to team up with a firm that is focused on long term care [insurance], preferably one that is tied in with multiple carriers.”
The LTCI-focused brokerage should serve as a clearinghouse of product and carrier information. “They’re the ones you rely on to keep you up to date on all the latest and greatest products and features,” Hurst says.
Brown’s brokerage provides him with a steady diet of information, to the point where he often finds out about new products and features before they hit the market. “Not a day goes by that I don’t get six or seven e-mails from my broker, telling me about some new development.”
What do you know?
But that kind of information is only valuable if the advisor has a strong grasp of basic LTCI product chassis and features. An advisor who possesses such a grasp is well equipped to compare policies for clients and help choose ones that best meet their needs. An advisor who lacks such an understanding runs the risk of having his lack of knowledge exposed, leading to lost credibility and perhaps lost clients and lost sales.
“If your knowledge of the product isn’t adequate, you’re probably going to end up selling people policies that are inadequate,” Brown says. “And eventually, those policies are going to be replaced.”
So how does one wrap his head around such a sprawling universe of carriers, products and features? The information adsorption phase of the LTCI 101 course starts with learning about the three basic product chassis, Johnson says. The advisor or agent should know the key distinctions between indemnity, cash, and reimbursement plans and what the differences are between a lifetime benefit plan and plans with pre-established benefit periods (three years, five years, etc.). He also should know which types of clients are generally suited to each kind of plan. If a client is wealthy and wants the utmost in flexibility, for example, the advisor may steer the person to a cash plan. If the client doesn’t have a huge estate or the income to pay the larger premiums associated with a cash plan, a three- or five-year indemnity or reimbursement plan may be the right fit.
Then there are policy design features and add-ons to consider, the volume of which can be enough to make a newcomer’s head spin. It’s useful for the advisor to develop a filter that reliably separates the meaningful from the superfluous, contends Hurst.
“A lot of products have bells and whistles the average client won’t need or use.” She suggests agents and advisors secure contract specimens from carriers and read the fine print in those specimens to really gain a grasp of product nuances. “Every product has its good and its bad points. Sometimes you need to get down to the fine print to find what they are.”